Approach
The Innovation Facility targets innovative projects that stimulate sustainable climate action combined with positive biodiversity impacts.
Projects selected for funding must go beyond the requirements of voluntary carbon standards (VCS or Gold Standard) and demonstrate measurable biodiversity benefits and livelihood outcomes.
Within defined thematic areas, projects shall provide a significant contribution to innovation and demonstrate the feasibility of new approaches, e.g. being first of its kind in the country.
Typically, it is expected that the grant financing will be used for the final stage of project preparation and first concrete action on implementation, e.g. tree planting.
All projects will need to follow a set of requirements to safeguard integrity.
The Innovation Facility will support innovative nature-based carbon projects in the categories of:
Forest-based activities that focus only on additional sequestration (removal) of CO2
Under the Innovation Facility, the principle focus of forest-based carbon removals is on the capture and storage of CO2, whilst providing significant ecological and social benefits such as improved biodiversity, soil regeneration, and improved livelihoods. Applications are encouraged on the following:
This refers to the recovery of degraded or deforested land and ecosystems. The recovery of biodiversity and ecosystem function that results in the increased health and resilience of the land by re-establishing native forests or promoting natural regeneration. Types of action under restoration may include:
- Natural regeneration
- Assisted natural regeneration
- Planting native species
This is the integration of trees into agricultural systems, combining crops and/or livestock with forestry to enhance both carbon sequestration and land productivity. Well-designed and implemented agroforestry systems promote biodiversity, soil health, and carbon capture. Types of action under agroforestry may include:
- Silvo-arable systems
- Silvo-pastoral systems
- Silvo-arable systems
Forestry activities should focus on carbon removals only. REDD projects are excluded. Removals or restoration projects are considered to fetch significantly better prices; they are easier to measure, baseline definition is more straightforward and thus achieved / measured emission reductions are usually more credible. In combination with digital impact monitoring tools and remote sensing techniques, it is possible, and at reasonable costs, to verify and attribute the direct impacts of a removal project (e.g., reforestation or agroforestry), and its social and environmental impacts. In the forest sector, removals currently account for about 20% of the VCM, but their share is expected to increase in the future.
The Innovation Facility prioritises the design and implementation of forestry activities that offer great potential for the private sector to engage and invest in bankable, high-impact and high integrity VCM projects. These projects will have measurable carbon benefits for forest landscapes, in or around KBAs, that improve biodiversity, livelihood, and well-being benefits for local communities.
Wetland-based activities that focus on avoided emissions and removals of CO2
Wetlands, particularly peatlands, store vast amounts of carbon in the form of partially decayed organic matter, and they play a crucial role in climate regulation. Therefore, under the Innovation Facility, in addition to carbon removals and storage, avoided CO2 emissions will also be considered for projects that prioritise wetlands. The protection and restoration of these ecosystems can avoid emissions and enhance carbon removals, whilst their mismanagement can lead to substantial carbon emissions. Applications are encouraged on the following:
Wetlands, particularly peatlands, store vast amounts of carbon in the form of partially decayed organic matter, and they play a crucial role in climate regulation. Therefore, under the Innovation Facility, in addition to carbon removals and storage, avoided CO2 emissions will also be considered for projects that prioritise wetlands. The protection and restoration of these ecosystems can avoid emissions and enhance carbon removals, whilst their mismanagement can lead to substantial carbon emissions. Applications are encouraged on the following:
- Rewetting
- Revegetation: planting native species
- Restoring hydrology
Given the important climate benefits due to their significant carbon storage capacity, keeping peatlands intact and restoring those that have been degraded offers a powerful tool for mitigating climate change. The Innovation Facility prioritises the design and implementation of wetland activities that offer the best opportunity to develop high-impact and high integrity VCM projects with measurable carbon benefits from peatlands, in or around KBAs, that improve biodiversity and livelihood and well-being of local communities.
Blue Carbon activities that focus on avoided emissions and removals of CO2
Oceans and their ecosystems buffer much human-induced climate change. The main coastal ecosystems that are eligible for active climate mitigation policies and have also been given corresponding generic methodologies for GHG accounting by the IPCC are mangroves, salt marshes, kelp, and seagrass beds. Blue Carbon refers to the carbon stored in these ecosystems, which all play a crucial role in both avoided emissions and carbon removals. They sequester CO2 from the atmosphere and store it in both biomass and the sediment beneath them, but when they are degraded or destroyed, they release large amounts of stored carbon. Applications are encouraged on the following:
This refers to actions that restore or enhance the carbon sequestration potential of these ecosystems, allowing them to absorb and store more CO2. These ecosystems are highly efficient at capturing carbon from the atmosphere and ocean, sequestering it in both living biomass and the sediments. Types of actions that would contribute to carbon removals from Blue Carbon ecosystems may include:
- Mangrove protection
- Seagrass bed protection
- Kelp forest protection
- Salt marsh restoration
Kelp very efficiently sequesters carbon dioxide from the atmosphere and acts as a carbon sink in the deep sea and marine sediments. However, seaweed meadows are subject to strong pressures from coastal infrastructure development, eutrophication, climate change, and a range of other human impacts. Protecting kelp meadows (seaweed) would be a relatively inexpensive endeavour due to the large carbon stocks in the soil. Conservation of seaweed has great potential as a blue carbon solution, given the large area it covers globally and the significant threats it faces, and would significantly reduce emissions.
Once seaweed meadows are degraded, seaweed farming is an effective option. There are two climate-change approaches to this: 1) long-term storage of the carbon stored in seaweed in the deep sea (carbon capture and storage) and 2) use and substitution of other products, mainly feed.
The Innovation Facility acknowledges that Blue Carbon ecosystems are essential for both avoiding emissions by protecting existing carbon-rich ecosystems and removing CO2 through restoration. We need to upscale successful activities that demonstrate effective design and implement to achieve robust high impact high intensity VCM projects that provide biodiversity benefits, coastal protection, and supporting livelihoods.
Project location
Selected projects must:
- Be within the scope of Official Development Assistance (ODA) – eligible countries.
- Be in or near to Key Biodiversity Areas (KBAs).